Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: Weak | Durables | Orders | Recovery

Economists: Durable-Goods Drop to 3-Year Low Proves Economy 'Fell Flat'

Wednesday, 25 April 2012 09:37 AM EDT

Demand for long-lasting U.S. manufactured goods was the weakest in three years in March and a gauge of business spending plans fell, suggesting the economy lost momentum as the first quarter drew to a close.

Durable goods orders dropped 4.2 percent, the largest decline since January 2009, the Commerce Department said on Wednesday after a downwardly revised 1.9 percent increase in February.

Economists had forecast orders for durable goods, which range from toasters to aircraft, falling 1.7 percent after a previously reported 2.4 percent rise in February.

Editor's Note: Wall Street Insider: The System Is Rigged

"This adds to the evidence that momentum in the economy sort of fell flat in March," said Ellen Zentner, a senior U.S. economist at Nomura Securities in New York.

The data came as officials at the Federal Reserve met for a second day to deliberate on policy. The U.S. central bank isn't expected to make any policy changes and will issue its statement at the end of the meeting around 12:30 p.m.

U.S. stock index futures pared gains on the data, while prices for Treasury debt pared losses to stand little changed. The dollar extended losses against the yen.

The report was the latest to show the manufacturing sector losing a step in March and it added to signs that the economy ended the first quarter on a soft spot.

Data last week showed industrial production was flat in March for a second straight month, while some gauges of regional factory activity weakened in April.

In addition to weakness in factory gauges, U.S. jobs growth slowed sharply last month and consumer confidence ebbed.

Manufacturing has been one of the main sources of economic growth, but is slowing as eurozone economies slide into recession and China cools.

Even though there are signs of some weakening in economic data early in the second quarter, economists believe the bar remains high for the Fed to ease policy further through a third round of bond purchases or quantitative easing.

Data on Friday is expected to show gross domestic product grew at a 2.5 percent annual rate in the first quarter, according to the median of a Reuters poll, after expanding at a 3 percent pace in the fourth quarter.

Orders for durable goods last month were dragged down by a 12.5 percent plunge in bookings for transportation equipment — the most since November 2010.

That reflected a 47.6 percent drop in bookings for civilian aircraft. Boeing received only 53 orders for aircraft, according to the plane maker's website, down from 237 in February.

Orders for motor vehicles barely rose last month.

Excluding transportation, orders fell 1.1 percent after a 1.9 percent rise in February. Economists had forecast this category rising 0.5 percent.

Adding to the report's weak tenor, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent after an upwardly revised 2.8 percent rise the prior month.

Economists had expected this category to rise 0.9 percent after a previously reported 1.7 percent increase.

"What this tells us for business investment is that ... the wind has been taken out of the sails, going into the second quarter," Zentner said.

But shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, rose 2.6 percent after increasing 1.4 percent in February.

This suggests that growth in business investment in capital goods increased in the first quarter, but probably not as much as in previous periods.

Editor's Note: Wall Street Insider: The System Is Rigged


© 2023 Thomson/Reuters. All rights reserved.

Wednesday, 25 April 2012 09:37 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved